Complete Story

01/13/2009

With Genachowski, Adieu To A La Carte?

By: Ted Hearn, Multichannel News

Washington -- If President-elect Barack Obama is going to name his close friend and technology adviser Julius Genachowski to be Federal Communications Commission chairman, it will likely to take pressure off the cable industry regarding the pricing and packaging of TV channels, a pair of analysts said Tuesday.

Incumbent Federal Communications Commission chairman Kevin Martin put heat on cable to sell channels on an a la carte or individual basis. If he becomes the new FCC chairman, Genachowski would focus instead on ensuring that cable broadband networks remain open to innovators that don't control access to consumers.

"We would not expect Genachowski to be the particular thorn for cable operators that ... Martin often has been," said Stifel Nicolaus analysts David Kaut and Rebecca Arbogast.

Citing unnamed Obama transition officials and other, The Wall Street Journal and The New York Times, among other newspapers, reported Tuesday that Obama intended to nominate Genachowski, a campaign fundraiser whose friendship with Obama dates to their college years in New York City.

During the campaign, Obama pledged in a meeting with Google employees that he wouldn't let broadband network owners discriminate against content providers. Obama supported a Senate bill that would impose so-called network neutrality requirements on cable and phone companies offering high-speed Internet access.

"We would expect Genachowski to pursue the Obama communications agenda [which he helped develop] of promoting greater broadband deployment and access, an open Internet and network neutrality, competition and innovation, and media diversity, among other broad goals," said Kaut and Arbogast.

Genachowski, 46, attended Columbia University and Harvard Law School with Obama, and the two remained close over the years.

Genachowski was a law clerk to U.S. Court of Appeals Judge Abner Mikva, and he also clerked for U.S. Supreme Court Justice David Souter of the Supreme Court. He was chief counsel toFCC chairman Reed Hundt during the Clinton administration.

In the private sector, Genachowski was an executive at IAC/InterActive Corp. run by Barry Diller. He is currently a venture capitalist in Washington, the co-founder of Rock Creek Ventures and LaunchBox Digital, which funnel capital to digital media and commerce firms.

During the campaign, Genachowski, who raised more than $500,000 for Obama, reportedly was the individual who told Obama to exploit the Internet as a fund-raising tool and embrace social networking techniques popularized by Facebook and MySpace.

Support for Genachowski's appointment is coming from groups with diverse ideological backgrounds.

"Genachowsi is an outstanding choice to chair the [FCC]. He is knowledgeable, experienced, and presumably will have the ear of the most influential people within the [Obama] administration," said Ken Ferree, president of the Progress & Freedom Foundation, a free-market think tank in Washington D.C.

Ferree, chief of the FCC's Media Bureau under chairman Michael Powell, was a leader in the FCC's decision in March 2002 to classify cable modem service as an unregulated information service not subject to open network requirements that applied then to digital subscriber line service (DSL) offered by AT&T (then called SBC Communications) and Verizon.

Not surprisingly, Genachowski's reported appointment won praise from a group that complained to the FCC that Comcast Corp.'s broadband network was discriminating against users of peer-to-peer applications, such BitTorrent.

"As the architect of President-elect Obama's Technology and Innovation Plan, it is clear that [Genachowski] understands the importance of open networks and a regulatory environment that promotes innovation and competition to a robust democracy and a health economy," Gigi B. Sohn, president and co-founder of Public Knowledge, a group that defines itself as "working to defend citizens' rights in the emerging digital culture."

In office, Genachowski's first challenge will be the national switch to digital broadcast television on Feb. 17. Last week, Obama transition team co-chair John Podesta urged Congress to consider postponing the DTV transition for an unspecified period of time.

"The next several years will present opportunities and obstacles in the technology and communications industries, including the coming DTV transition and the government's effort to deploy broadband in underserved areas," said Matt Polka, president of the American Cable Association, a consortium of small cable operators.